When “Porco” — whose face has been transformed into that of a pig by a mysterious spell — infuriates a band of sky pirates with his aerial heroics, the pirates hire Curtis, a rival pilot, to “get rid” of him. On the ground, the two pilots compete for the affections of the beautiful Gina. But it is in the air where the true battles are waged. Will our hero be victorious?
The opening scene shows Porco in his flight suit, resting on the beach of a tiny island. After he finishes negotiating the price of his services by telephone, he leisurely takes off in his red seaplane to rescue a kidnapped group of girls from a gang of bumbling seaplane pirates. He succeeds in rescuing the girls but lets the pirates keep some of the loot for repairs. Afterward, he flies to the Hotel Adriano for dinner and spends some time with Gina, one of his closest friends and the owner of the hotel. While at the hotel, Porco also meets Curtis, an American pilot who is negotiating an employment contract with a band of pirates.
Some time later, as Porco flies his plane into Milan for repairs, Curtis attempts to shoot him down. Porco’s engine breaks down, making him an easy target for Curtis, who shoots up his plane and he crashes. Curtis claims to have killed Porco, but Porco has landed his damaged plane on an island. Porco finishes his journey to Milan and has his plane repaired by Piccolo S.P.A., an aircraft design shop owned by an old mechanic and friend of Porco’s. Because of the Great Depression, the men of the company have left in droves to find work abroad, so the company enlists the aid of the owner’s granddaughter, Fio, along with a workforce of female relatives, to work on redesign and repair of the plane. Despite his initial misgivings, Porco soon realizes that Fio, in spite of her age and gender, is a mechanical genius. His plane is completed, and she insists on flying with him in case adjustments need to be made to the plane. At first, he is resolutely against it, but she talks him into letting her on, and Fio flies off with him, barely avoiding an ambush by the Italian secret police.
Meanwhile, Curtis has found his way into Gina’s private garden and invites her to a glamorous life back in America. Gina laughs and refuses telling him “love here is more complicated than in America”. Stunned, he asks who she is waiting for, and Gina tells him she has bet with herself that if a certain man comes into her garden, they will fall in love. Just then Porco’s plane appears and circles Gina’s garden, and Gina rushes off to see if he will land. He does some spins and tricks in the air, but Porco does not land. Curtis is amazed that she would choose “that pig!” over him.
Upon landing at his island hideaway (which resembles Smuggler’s Cove), Porco discovers that it has been infiltrated by pirates. Fio talks them out of killing Porco or destroying his plane and appeals to their honor as seaplane pilots. Curtis then reveals himself and challenges Porco to a duel. The terms of the duel are agreed upon: If Porco wins, Curtis will pay off his airplane repairs; if Curtis wins, Fio will marry him.
Later that night, Fio wakes up and thinks she has glimpsed the famous Marco Rossolini who is Porco in human form. She asks him to tell her a story and he tells her about a strange incident that happened to him in the last summer of the war, when Porco was still in the air force and still a human. Porco’s best friend and fellow fighter Bellini had married Gina and, immediately after, he and Porco had returned to the skies, where their seaplanes were attacked by an Austrian squadron. Exhausted and struggling to operate his plane, he realized he was too weak to control it, and gave up. His plane then piloted itself into a cloud of startling brightness and purity and he imagined himself to be in heaven. Emerging at the top of the cloud, he spotted a white band high above him. The other squadron pilots from the battle, including Bellini, emerged from the cloud in their planes and climbed to the white band, which is revealed to the viewer to be a vast procession of planes downed in battle. Porco shouted to Bellini that he must not leave Gina, that he would go instead. Bellini, apparently deaf to Porco’s cry, did not turn. Porco admits that this incident is a great source of guilt for him. It is unclear as to whether this caused his transformation (although it is greatly implied).
The next day, Porco and Curtis meet for the dogfight. The duel is organized by the pirates and held on a secluded island. The outcome is heavily bet on by the criminals and seaplane pilots alike. At the fight’s beginning, Porco merely avoids Curtis, baiting him into wasting bullets. However, as the fight progresses, Curtis realizes Porco’s strategy and starts conserving his ammo. Porco out-flies him and gains a superior firing position by using the loop maneuver that made him ace of the Adriatic during the war, but still he does not shoot at Curtis. Curtis thinks that his enemy’s guns are jammed, but the real reason is revealed to Fio by one of the pirate bosses: Porco will not take a shot at an enemy if there is a risk of hitting the pilot. Curtis taunts the pig that his guns are jammed but is quickly shut up by a short burst of fire from the red seaplane. This is the start of a stalemate, with each pilot attempting to gain the advantage over the other.
Meanwhile, Gina has received a message from a friend that the Italian Air Force are rushing toward the fight with an arrest warrant out for Porco, and she takes it upon herself to warn him. Back at the fight, both pilots are extraordinarily tired and beginning to fade. Porco finally gains an angle for a clear shot at Curtis’ engine but is dismayed to find that his machine gun is jammed and he cannot fire. Curtis sees this vulnerability, and attempts to shoot Porco, but discovers he has run out of bullets. Both eventually settle on throwing debris from their planes at each other, until they land in the bay and the duel degenerates into a fistfight. Both are exhausted from the air combat but go on for Fio. The duel goes on for several rounds, both Curtis and Porco develop many bumps and bruises, but no one will give up (Porco is surprised that Curtis is stronger than he looks). During the fight, Curtis tells Porco that Gina is in love with him and, ironically, accuses Porco of being a womanizer and implies that he is leading Fio on. The two hit one another in the face with equal strength and both fall into the water. It is decided that the first one to come up wins the fight.
Just then, Gina’s plane arrives. When Porco hears Gina calling him, his strength is returned and he gets up from under the water. In doing so, he wins the duel with Curtis. Gina then warns the island’s inhabitants of the approaching Italian Air Force and they promptly flee. Curtis holds up his end of the deal and pays Fio. Porco sends Fio away with Gina to keep her safe, as Fio glides away with Gina, she kisses Porco. Porco tells Curtis that he is going to draw the Air Force away from the others, and asks if Curtis wants to join him. Curtis agrees and then notices that Porco’s face underwent a dramatic change (which the audience doesn’t see, but is implied to have reverted to its human form). The film ends with a voice-over narration by Fio describing the years that follow, in which she inherits the Piccolo company, Curtis becomes a Hollywood star, and the pirate pilots spend their old age reminiscing at Gina’s club. The English dub reveals that Porco “flew circles around the Italian Air Force” and remains at large, however, the Japanese subtitles translate, “Porco never showed up again, even after the Air Force did its sweep.” In reference to Gina’s bet with herself regarding Porco, she says that it’s “their secret”. However, a red plane can be seen at the other end of Gina’s island.